Turkish Code of Commerce – Muhasebe News

Basic Information about Corporation According to Turkish Code of Commerce

MuhasebeNews — Mon, 22 Oct 2018 13:25:59 +0000

1- What does “Corporation” Mean?
Corporation means a company whose capital is specified and shared and which is in charge of its own assets because of its debits. (Article 329 of the Turkish Code of Commerce)

2- What is the field of activity of a Corporation?
Corporations can be found for all kinds of economic goals and subjects that are not forbidden by law. (Article 331 of the Turkish Code of Commerce)

3- What is the minimum amount of capital for Corporations?
The original capital referring to the committed capital in articles of incorporation cannot be less than 50.000 Turkish Lira. On the other hand, the initial capital in non-public corporations, who accept the registered capital system showing maximum realm of authority given to Board of Directors for capital increase, cannot be less than 100.000 Turkish Lira. (Article 332 of the Turkish Code of Commerce)

4- How many partners are needed in order to establish a Corporation?
There should be one or more than one founders in order to establish a Corporation. (Article 338 of the Turkish Code of Commerce)

5- When should a Corporation make payments for capital in cash?
25% of par value of subscribed capital in cash should be paid before the registration and the rest should be paid within 24 months after the registration. However, the absolute amount of premiums on issued shares should be paid before the registration. (Article 344 of the Turkish Code of Commerce)

6- What is the borrowing prohibition of Corporation shareholders?
Shareholders cannot become indebted to the company until they fulfill liabilities due (which come out because of capital subscription) and the profit of the company (with free reserves) becomes equal to losses of previous periods. (Article 358 of the Turkish Code of Commerce)

7- Members of the Board of Directors in Corporations
There are one or more than one members in the Board of Directors who are appointed with the articles of incorporation or by the Board of Directors. (Article 359 of the Turkish Code of Commerce)

8- What is the term of Office of Board of Directors?
The term of office of Board of Directors should be maximum 3 years. Unless indicated otherwise in the articles of incorporation, the same person can be appointed again. (Article 362 of the Turkish Code of Commerce)

9- Can a member of the Board of Directors be suspended from his/her duty earlier?
Even if they are appointed with the articles of incorporation, members of the Board of Directors can be suspended from their duties earlier on condition that there is a provision related to the agenda or there is a justified reason (even if there is no provision related to the agenda). Legal entity who is a member of the Board of Directors can change the person being the representative on behalf of it. (Article 364 of the Turkish Code of Commerce)

10- Which Board Administrate the Corporation?
A Corporation should be administrated and represented by the Board of Directors. (Article 365 of the Turkish Code of Commerce)

Source: the Turkish Code of Commerce Numbered 6102

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

What is the Partnership and Capital Structure in Corporations?

MuhasebeNews — Mon, 03 Jul 2017 15:20:49 +0000

1- WHAT IS THE CAPITAL STRUCTURE IN CORPORATIONS?
Corporations are established by one or more than one real person or legal entity under a commercial name. Its capital is defined and divided into shares and it is only responsible for its own assets for its debts. Capital base is 50.000 TL for the companies which accept original capital system and each share is worth 1 kurus and the multiples of it.

2- HOW MANY SHAREHOLDERS CAN ESTABLISH A CORPORATION?
Corporations can be established with 1 shareholder. If the number of shareholders exceeds 250, that Corporation will be subject to the regulations of Capital Markets Board.

Source: Turkish Code of Commerce

What is the Partnership and Capital Structure in Limited Companies?

MuhasebeNews — Mon, 03 Jul 2017 14:26:37 +0000

1- WHO CAN ESTABLISH A LIMITED COMPANY?
Limited Companies are established by one or more than one real person or legal entity under a commercial name. The original capital should be determined and that capital consists of total amount of capital stocks. Shareholders are not responsible for company debts. They are responsible for paying capital stocks that they undertake and fulfilling additional payments and subsidiary liabilities that are provided in the articles of incorporation. A limited company can be established for every kinds of economical purpose and subject that are not forbidden by law.

2- HOW MANY SHAREHOLDERS CAN ESTABLISH A LIMITED COMPANY?
It can be a one-man company; however, the number of shareholders should be maximum 50. The company can turn into one-man company afterwards. In this case, this fact should be notified to directors within 7 days. After this notification, directors are supposed to enroll and declare that company has been turned into one-man company. Company cannot acquire its own share in order to be the sole shareholder.

3- WHAT SHOULD BE THE AMOUNT OF CAPITAL OF A CO. LTD?
Minimum amount of capital in limited companies should be at least 10.000 TL and a a share should be at least 25 TL and the multiples of it.

Source: Turkish Code of Commerce

If there is a Foreign Partner during Incorporation, What Should be Done According to Turkish Laws?

MuhasebeNews — Fri, 30 Jun 2017 12:07:24 +0000

If there is a foreign partner during incorporation, the followings will be needed.
1- Translated and notarized copy of foreign real person (partner)
2- Tax number taken from tax office or a document which shows ID number peculiar to foreigners
3- Notarized residence permit (if he/she resides in Turkey)
4- (For Turkish citizens residing abroad) a document which proves that he/she resides/works abroad and is taken related institutions of that country

***If foreign partner is also the Director of the company, work permit will not be necessary.

Source: Turkish Code of Commerce

Can Board of Directors Become Indebted to the Company According to Turkish Laws?

MuhasebeNews — Fri, 30 Jun 2017 10:40:56 +0000

A Member of Board cannot perform any action on behalf of himself/herself or other persons with the company without getting permission from the Board of Directors. Otherwise, The company may claim that committed action is invalid/void. The other party cannot assert this kind of a claim.

Within the scope of this prohibition;
1- A Member of Board cannot perform any action on behalf of himself/herself or other persons without getting permission from the Board of Directors; otherwise, the company may claim that commited action is invalid/void.
2- Member of Board who has no share and acquaintances/relatives of Member of Board having no share and listed in article 393 cannot become indebted (in cash) to the company. Company cannot pledge, issue guarantee, give the assurance, give any responsibilities and take over these persons’ debts. Otherwise, company’s creditors can directly pursue these persons for company debts in line with the amount that the company holds responsible.

Source: Turkish Code of Commerce

If a Legal Entity Becomes a Partner during Incorporations, What Should be Done?

MuhasebeNews — Fri, 30 Jun 2017 08:58:53 +0000

Legal entities can be assigned to the Board of Directors in Corporations and Limited Companies; however, real person(s) representing legal entities cannot be assigned as a Member of Board or a Director. If a legal entity is assigned, there should be a real person assigned as a representative.

There should be participation decision made by a legal entity. This participation decision should be notarized; furthermore, capitalization and its representative should be stated.

Source: Turkish Code of Commerce

What is the Liquidation Process in Corporations?

MuhasebeNews — Thu, 29 Jun 2017 11:42:12 +0000

If the following conditions are fulfilled, Corporations will go into liquidation.
1- Despite of expiry, unless Corporation virtually stays in business and the business hasn’t been turned into indefinite period and anticipated period of time in articles of incorporation expires.
2- If the field of operation actualizes or the actualization becomes impossible.
3- If one of sunset clauses stated in articles of association takes place.
4- With the general assembly resolution in accordance with 3rd and 4th clauses of article 421.
5- If there is a decision to go into liquidation.
6- Conditions anticipated by laws.

Source: Turkish Code of Commerce

What is Permanent Representative?

MuhasebeNews — Wed, 22 Mar 2017 12:40:53 +0000

1- HOW A WORK PLACE DETERMINED ACCORDING TO REVENUE LAW?
A work place is determined according to Tax Procedure Law.

2- WHAT IS PERMANENT REPRESENTATIVE?
Permanent representative, is authorized to fulfill a number of business transactions
2.1- by depending on represented,
2.2- On behalf of his/her name,
2.2.1- in a specific or undefined period of time with a labor contract or attorney agreement.

3- WHO ARE REGARDED AS PERMANENT REPRESENTATIVE OF A REPRESENTED?
People listed below are regarded as permanent representative of a represented without stipulating;
3.1- agencies (according to Turkish Code of Commerce),
3.1.1- Commercial representatives,
3.1.2- Merchants’ attorney,
3.1.3- Official merchants,

3.2- People whose expenses are paid fully or partially by the represented (excluding advertisement costs belonging to represented),
3.3- People who keep products in stores and warehouses on behalf of represented in order to sell them by means of consignation.

***Even if a person represents more than one person, he will still be regarded as permanent representative.

Source: Revenue Law